How can SEO Agencies scale? Seemingly, the act is impossible – you have one of two plights that mean your eventual downfall when broaching a certain point of growth.
If you take the white hat route like SEOMoz, you are forced to allocate much of your cost to salary and recruiting, which means the imminent risk and difficulty of hiring SEOs talented enough to consistently bring in links that make websites rank, and therefore validate their high consulting fees. At some point it becomes impossible to impart the expertise and knowledge of the top tier SEOs at the top of the company, like Rand, to the grunt-work interns putting in the sweat and tears. The further and further detached the breadwinners come from the grunts, the more the company becomes an Indian call center with a watered-down service package – one that causes white-hat agencies like SEOMoz or High Rankings to either jump ship or publicly complain about the Google web spam team.
If you choose the black/gray hat approach – as most agencies do – your biggest costs aren’t employees – they’re link acquisition fees. When going gray, your employees can handle many more client accounts, but, to do so, much of their outreach must be done through link brokers – reducing link acquisition time and purchasing cycles, allowing you to scale client size without needing to hire countless interns who can’t tell a hyperlink from a hot dog. The problem, here, is that you are at the whim of the brokers – they assimilate much of the margins, making it difficult to make real, massive profits off of your efforts.
If you decide to go direct to the websites, turnaround is slow, and the cost is higher - because they are no longer forced to mark down for the car dealerships – the link brokers. You spend more time acquiring the link, too, increasing labor costs and again, making it increasingly difficult to scale.
The Link Brokers Data Bed
Aaron Wall released a post in May detailing that gray-hat SEOs should possibly fear the knowledge link brokers have of their spending budgets – as said brokers have access to what kind of money you’re putting to work, keywords, and basically, all the data a business needs to determine profitability. I don’t necessarily agree that we should fear a link broker’s data knowledge – any and every business should be diversifying where they acquire links, whether or not they’re gray or white – so it should be rather indeterminable the exact cost associated with your niche.
And, there’s the case for ideas being a multipler of execution – for any medium sized business, it may be worthwhile and determinable by a link broker that a vertical could be particularly profitable, but many still won’t have the resources, time or ability to put together the capital and execute on it to compete against you.
But, despite this point, there’s an overarching element from Wall’s piece that partially inspired this post – the inherent advantage link brokers have over all of SEO – one they may or may not be taking advantage of – but one they should be.
We Can’t Compete Against Link Brokers
Imagine a beginning stage media company, one with the intention of eventually selling SEO services, and/or building out their own properties. If they truly had the desire to build out a media company that would scale, they’d first invest a sunk cost in building out a website that would become a reputable link broker. By becoming a service that brought bloggers to them, they’d not only get the income from the text link sales, they’d also be able to build out large properties and sell SEO services at immense, indomitable margins, because they’d be buying links at the minimum viable cost to the blogger – not at the mark-up that all SEO companies are forced to deal with currently.
They would be able to provide the same results to SEO companies and get the same link juice passed – at a fraction of the cost. Whether they were competing against white-hat patriots or black-hat demons, they would be impossible to compete against – because they would have the platform to purchase links at bottom dollar fees.
They would be the car dealership purchasing used cars from customers that came direct to them – while every competitor would be the ones buying cars at markup price, right from the dealership. For websites in similar niches with similar offerings, this competitive advantage would be impossible to overcome.
The Big Brother of SEO Companies
If I had the cash to throw down as a VC, I’d be ringing these brokers off the hook with this pitch, and/or scrambling to find ways to build this out myself. The only qualm I see with it is privatization – if a current, large media company publicly acquired a service like Blogvertise or Sponsored Reviews, it would be fairly obvious what they were doing, and Google would be forced to take action.
However, if a fresh company did it more silently, and only built out mid-tier websites, it could be done effectively with a well orchestrated waving of NDAs and well-trusted closed lips. Also, a VC could invest directly in established brokers, using their resources to fill it out with talented developers to scale the construction of multiple websites to rule the SERPs – and/or sell SEO services at huge margins. And they wouldn’t even have to work unethically and steal the data of the people who buy links from them – because they really wouldn’t even need to.
It’s likely that this is already occurring at some scale – but I imagine, and feel, that it is not nearly occurring at the scale it could be. But who’s to say? It can be pretty difficult to care when a single company is kicking your ass in the SERPs – because you can still do pretty well despite them.
Of course, if you’re naive, you might be of the belief that at some point, paid links will pass no value, and this investment would be for naught. If you really believe that, I say, read up on disruptive links, and also, go home – you’re playing in the wrong sandbox.